The Gears Of Change: Strategy, Culture, AI And The Future Of Work

Introduction

This is a time of incredible contrast. Fear is palpable on many fronts of business and society. At the same time, excitement about new possibilities abounds as emerging technology progresses at incredible speed. AI reveals new opportunities and enables the solving of very difficult problems. It also confirms we are complex beings with immense creativity and inventive capability.

In the minds of business leaders, educators, policymakers, parents, and to some extent, young adults, there is a core question which remains largely undiscussed and unanswered; “How does the global workforce move forward into the future?” What is the role of people in business whereby we can assume AI will be a part of the fabric of the workforce and ‘jobs to be done’?

There are many layers of strategy in business, higher level and tactical. When broken down into the interconnected pieces and parts that make a business thrive, the core of a business is a culture. The intersection of strategy and culture is worth inspection as it remains unclear the role AI will play in business and the future of the global workforce.

In this paper we explore the concepts of strategy, culture and what this means for business and the global workforce in the post-AI era.

AI is at the Doorstep of Leadership in Business

Roughly one year ago a Chinese game company named Fujian, NetDragon Websoft, appointed a virtual AI powered CEO¹, Ms. Tang Yu, to support decision making for daily operations and serve as a real time data center and analytics tool for the Board of Directors. The company believes AI is the future of corporate management as they move into expanding algorithms for their metaverse-based working environment. In 2017, Jack Ma predicted an AI CEO would be highlighted as the best CEO in 30 years. So how is all this going? Within this year's timeframe, Fujian NetDragon Websoft has beat growth expectations on the Hang Seng Index with an increase in stock price by over 10% over the last 6 months – now worth $1.1B.²

It is clear³ over many decades of technological advances, companies are quite comfortable replacing lower level workers to cut costs and drive efficiency.⁴ As we move from one major technological shift to the next, from outsourcing, ecommerce, cloud computing, and now to an era of advanced intelligence coupled with extreme automation, we are propelled into deep introspection around what the future of the workforce will look like. The burning questions are about our safety, security, and the relevance of human capital in business.

If NetDragon can replace a CEO and outperform an index of major companies in Asia, what do we need executive leaders for anyway? Why not cut costs and appoint AI bots as board members? How about a “Series B” stage AI leadership team? In startups, Series B requires extreme discipline in “go to market fit” and is where many companies push back on having process and applied learnings⁵ from larger organizations. Seems an AI leadership team would be a great fit here, doesn’t it?

What about technical roles? Not long ago, there was much discussion about AI replacing developers, however the dialogue has settled on AI as a path to modern software development processes to accelerate engineering⁶, due to the leadership of GitHub. How about doctors or clinicians for that matter, so we can have evolved telehealth to consume appropriate health care services in an affordable manner? AI can pass the MCAT,⁷ the LSAT, as well as the bar exam.⁸ If a legal framework and policy is established for a company, AI can be applied to help accelerate the contracts negotiation process reducing days to hours. Farmers now have tractors that kill weeds with AI-informed lasers from Carbon Robotics and orchards can also harvest fruit with drones,⁹ which has prompted a fierce debate on the speed and accuracy of experienced farm workers. What about teachers or professors? Do we even want AI educating kids or college students, an initiative that Harvard is testing?¹⁰ Would the cost of higher education be affordable if bots are incorporated into the curriculum, supporting or in place of tenured professors? Are we comfortable with AI assisting with caregiving for the elderly?¹¹ AI, as part of home and hospital care, is being tested as well. What is common in all of these examples are the motivations by companies to drive profit by lowering costs, while solving a looming workforce crisis.

There is an entire industry of customer service for care, fraud, support, and inquiry, with agents serving as a vital component of business support – a $350B industry ripe for change.¹² Some customer service AI bots claim to automate up to 80% of customer care.¹³ There are services now, like Do Not Pay, whose AI GPT autonomous agents work on behalf of consumers to tackle the difficult customer situations that require an incredible amount of patience and time, finally addressing the dreadful abyss of phone trees, recordings and hold times. We expect to see the rise of new consumer machines to business (cM2B) solutions, a whole new CX business model, where consumers will have AI-powered bots that operate on their behalf. Machine to machine (M2M) based work will be here before we know it for many processes agents do today.

We know, it's a lot to take in. The subject is incredibly uncomfortable and overwhelming, and it’s hard to understand what’s real, what’s tech hype, and what’s plain fear mongering. There were research papers written as far back as the early 90’s on the impact of computerization on jobs.¹⁴ McKinsey reassures job growth is always the result of innovation.¹⁵ The Whitehouse published a paper in late 2022 in concert with the EU.¹⁶ Most recently, OpenAI penned a full report detailing AI’s impact on the job market.¹⁷ While it is more comfortable to look back into history for logical examples of where technology has displaced human work (tollway readers, grocery scanners, etc.), up to this point, there has been nothing in human history like AI, except humans.

So, what is the role of leadership and humans in business? Let’s come back to this.

What is Strategy?

Broad company level strategy sets the direction for a business. The purpose, mission, the industries and markets for which a business will engage, the business model, the offerings, the goals, and the people, process and technology to make it all work. The purpose of strategy is to create value for the business and its stakeholders, which includes customers, suppliers, and employees. Strategy differentiates a business in the market in order to compete and win on value to protect margin.¹⁸ Strategic initiatives enable the top level goals and are measured across company metrics, both quantitative and qualitative key performance indicators (KPIs).

Aligning stakeholders to strategic initiatives is critical for execution and achieving the outcome of meeting company goals. Core to alignment across stakeholders is strong communication, effective collaboration, and KPIs that drive success and accountability across lines of business. Quality processes and technology enables people to deliver value to the stakeholders of the business. People utilizing technology in the context of process helps the business realize value by eliminating friction, managing risk, and supporting employees in their work experience. As much as technology and process is an enabler, it’s important to understand that sub-par technology will inhibit the business, and no process and/or too much process adds to a poor employee experience, which also negatively impacts business performance.

There is another aspect of business that is critical for success, and that’s the culture of a company.

Culture is not a mission statement or employee program with benefits or perks. It cannot be described in terms of a demographic statistics of a company, but rather people’s lived experience of how they are valued, how they communicate with each other, how they work together, the accepted behaviors and actions, as well as the way in which people think through ideas and problems.

It is often tied to the discussion of diversity, and while it’s true that homogeneous workforces by definition lack diversity, it is also true that a diverse workforce has a distinct culture, positive or negative. Culture is a key ingredient in executing the strategy.

Leaders are responsible for setting the tone for company culture and are demonstrated by their direct actions, the leaders they hire, and the company values they establish and deploy. Retaining human capital, delighting customers, and going the extra mile for a business is dependent upon whether the culture enables people or defeats them. Leaders, through their communication, style of management, and their impression on the next generation of leaders is the point of impact in how we should be thinking about the role of humans in the post AI era.

There has never been a more important moment to talk about the importance of leadership in business in the context of strategy, which when done right is rooted in a culture that enables and supports people to drive business performance. Documented research reveals that employee satisfaction is tied to business performance to the tune of a 65% improvement in share price¹⁹ and other valuable metrics. Put simply, the data says great culture drives positive business performance and bad culture does the opposite.

The Competitive Edge

Businesses who remain competitive over many decades are unafraid of continuous transformation, digital or otherwise. They understand that transformation is core to their strategy by embracing new ways of thinking, working, problem solving, and practicing resilience. They innovate and prepare for the future, which includes enabling people with new processes and technologies. For them, learning and evolving is a key part of their identity.

Talent programs with advanced learning opportunities are frequently offered as a mechanism of retention to a select few high performers,²⁰ carefully curated into a pipeline of future leaders. In a time where we have four generations working side by side in the workforce, we need to think about this shift differently considering that AI will impact all jobs, especially knowledge workers. Upskilling only some employees would create a distinct imbalance of access to knowledge across the workforce, which without a doubt would have a negative impact on company culture.

The concern of knowledge transfer from older to younger generations has been well documented for a decade. By 2030, all baby boomers will be over the age of 65.²¹ While many workers are of retirement age, a greater number will make the choice to stay in the workforce based on need, personal preference, or other considerations. According to the U.S. Bureau of Labor Statistics, the workforce participation rate for adults ages 56 to 74 is expected to grow to 30% by 2031,²¹ suggesting the need to continue upskilling workers in this demographic. Facing this reality, a benefit for GenX, Millennials, and GenZ, is the transfer of leadership skills.

It is in this unprecedented moment in business, a mindset of continuous learning, adopted by an intergenerational workforce, can inspire people in business to work creatively and efficiently together. Welcoming AI into the learning cycle will allow individuals to tap into a vast knowledge, develop new insights, solve problems faster, collaborate more effectively, while cultivating a stronger culture transitioning key leadership skills to future generations of smaller relative size.

The Role of AI in Business

We can assume based on immediate relevant examples that AI will become a significant part of the fabric of business over the next decade. As a matter of fact, we’ll go a step further and say that every line of business across every industry will utilize AI in some capacity. The early adopters will be the first to enable their employees for future success and reveal how people work with AI in line with the company goals and strategy. For these companies, AI will connect humans and machines and open extraordinary opportunities through working cohesively together. Conversely, companies who fail to recognize the criticality of AI or neglect implementation of policies to support the transition will be left behind in their respective markets.

As we transition into a business environment where AI is a part of our daily work, humans are in the loop of AI systems to guide the work and make the decisions, not the other way around. People provide leadership skills, model behaviors, and set the tone for culture as a strategic imperative for business. This thread is pulled by employees and carries a direct impact to business performance, as culture directly influences a businesses ability to implement strategy.

Putting It All Together

There is no question that this chapter of GenAI has been thrust upon businesses and for many, it was not even on the roadmap. Additionally, few understand the implications that AI will have on human resources, legal, sales, marketing, finance, product development, operations and supply chain. Today’s dilemma weighs on how to upskill an entire workforce overnight, and why do it to begin with? It’s a lot to consider and worthy of healthy discourse regarding how to evolve, while understanding the business requirements to meet the market moment.

StartStak is an AI-First business, utilizing AI in every process. Our approach revolves around human decision making in AI-powered work. We are continuously learning through doing, practicing, studying, and engaging experts. Then, we create and share knowledge with others based on our findings.

For all organizations large and small, it is essential to embrace the future of AI for business as an intergenerational learning unit because good culture drives positive business outcomes.

Begin by:

• Understanding AI will play a major role in every line of business.
• That people will continue to be vital to the cultural foundation of business, which is core to executing a business strategy and tied to business performance.
• Upskill employees and support of learning through doing. This will remove friction from their jobs to help them improve their skills, as well as job performance with new tools.

References

¹ Interesting Engineering: “A Chinese game company has appointed the world’s first humanoid robot as its CEO”, cited in July 2023 (Source)

² Business Insider: “A video game company made a bot the CEO, and its stock climbed”, cited in July 2023 (Source)

³ Politico: "The First Time America Freaked Out Over Automation", cited in July 2023 (Source)

⁴ World Economic Forum: "Cloud's trillion-dollar prize is up for grabs", cited in July 2023 (Source)

⁵ Harvard Business Review: “Start-Ups That Last”, cited in July 2023 (Source)

⁶ Acceleration Economy: "How ChatGPT Raises Software Developers’ Agility — and Their Value", cited in July 2023 (Source)

⁷ MedRxiv: “Performance of ChatGPT on the MCAT: The Road to Personalized and Equitable Premedical Learning”, cited in July 2023 (Source)

⁸ Stanford Law: "GPT-4 Passes the Bar Exam: What That Means for Artificial Intelligence Tools in the Legal Profession", cited in July 2023 (Source)

⁹ Business Insider: "Are fruit-picking drones the future of harvesting?", cited in July 2023 (Source)

¹⁰ New York Post: "Ivy League university unveils plan to teach students with AI chatbot this fall", cited in July 2023 (Source)

¹¹ The Guardian: "The future of elder care is here – and it’s artificial intelligence", cited July 2023 (Source)

¹² Forbes: "Customer Service is a 350b industry – and it's a mess", cited in July 2023 (Source)

¹³ Aisera: "Generative AI for Customer Service", cited in July 2023 (Source)

¹⁴ Semantic Scholar: "The future of employment: How susceptible are jobs to computerisation?", cited July 2023 (Source)

¹⁵ Mckinsey: “Five lessons from history on AI, automation, and employment”, cited in July 2023 (Source)

¹⁶ Whitehouse.gov: “THE IMPACT OF ARTIFICIAL INTELLIGENCE ON THE FUTURE OF WORKFORCES IN THE EUROPEAN UNION AND THE UNITED STATES OF AMERICA’”, cited in July 2023 (Source)

¹⁷ OpenAI: “GPTs are GPTs: An early look at the labor market impact potential of large language models”, cited in July 2023 (Source)

¹⁸ Harvard Business School: “WHAT IS BUSINESS STRATEGY & WHY IS IT IMPORTANT?”, cited in July 2023 (Source)

¹⁹ Forbes: “If Culture Comes First Performance Will Follow”, cited in July 2023 (Source)

²⁰ Harvard Business Review: "How to Keep Your Top Talent", cited in July 2023 (Source)

²¹ U.S. Bureau of Labor Statistics: “Number of people 75 and older in the labor force is expected to grow 96.5 percent by 2030”, cited in July 2023 (Source)